Posted 1 year ago | by Ben Armstrong
Stablecoins Thrive as Bitcoin Rides Turbulent Market: Coin Metrics
Crypto analysis company Coin Metrics released research that shows stablecoins have become hot over the last few months. Bitcoin (BTC) saw its biggest daily drop in the last seven years recently, and its price has been struggling with a volatile global marketplace.
Coin Metrics released its State of the Network report on March 23 after it analyzed numerous facets of the crypto market. A large part of the report focused on what happened crypto market as a whole amid the drawdown in Bitcoin prices over the last few weeks.
The data showed that stablecoins are gaining market share, which should not come as a big shock. Crypto holders in worked to preserve their capital as the market experienced a major downturn, and many have been turning to stablecoins.
Unlike cryptocurrency, which has a floating value, stablecoins are like a derivative which derive their value from a fiat currency. Some stablecoins do have actual fiat currency backing them up, while others are less transparent.
Stablecoins Get Love
Several stablecoins are making notable gains after the crash.
Stablecoin market caps are seem to be increasing after the crypto market downturn. Over the last few weeks, stablecoins like Circle’s USD Coin (USDC), reached new all-time highs. While a rise in stablecoin prices is rare, it has been happening as other tokens lost value.
The supply of stablecoins has begun growing since the coronavirus outbreak hit global markets. There has been a rush for any asset that appears to be more stable, and in addition to stablecoins, government debt, as well as physical gold has been in demand.
A Wild Global Market
While coronavirus is being blamed for the unsettling events in the global financial markets, the reality of the situation is far more complex. Central banks have been inflating a fiat currency bubble since the late 1990s, and current central bank actions demonstrate how this situation has been allowed to metastasize.
At the moment, the US FED is buying $125 billion USD worth of securities from the investment banks (and who knows who else), which will add up to the entire GDP of the USA in the matter of a few months' time.
Cryptos, like Bitcoin, are still a very small market. The entire market cap for the entire crypto space is currently only around $190 billion USD, of which more than half is comprised of BTC and USDT (a USD stablecoin).
Needless to say, when the world's largest central bank is monetizing the entire BTC market cap three times over on a daily basis, some inflation in the fiat currency system is probably coming in the not-too-distant future. Bitcoin, much like physical metals, is finite in supply, as is also used as money.